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Swiss Referendum Narrowly Back Free Trade Deal with Indonesia

Thursday, March 25, 2021

Swiss voters recently narrowly backed, with 51.7 percent support in a nationwide referendum, a free trade agreement with Indonesia that would abolish duties on industrial products including palm oil, according to an article published in thejakartapost.com on March 08.  Under the trade deal, tariffs would be gradually removed from almost all of Switzerland’s biggest exports to Indonesia, while the Swiss would abolish duties on Indonesian industrial products. Importers of Indonesian palm oil, however, must prove that it meets certain environmental and social standards. 

The agreement was signed in 2018 and approved by the Swiss parliament in 2019, but opponents were especially critical of Bern’s move to reduce import duties on palm oil.  The deal contains exceptions for agricultural products, notably to protect Switzerland’s sunflower and rapeseed oil production.  For palm oil, customs duties will not be removed but instead reduced by between 20 percent and 40 percent. 

Swiss President Guy Parmelin, who also holds the economy portfolio, said the concerns of the opponents will be under consideration and Switzerland will support Indonesia in producing sustainable palm oil. “This vote is not a choice of the economy over human rights and the environment,” he said, quoted by swissinfo.ch. Parmelin hinted that future trade deals may also incorporate sustainability clauses but stressed that each agreement is unique with its own set of challenges. The palm oil sector in Indonesia which has suffered economic policy setbacks in Europe welcomed the decision.

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